Abstract
John N. Robinson III on reimagining affordable housing production.
Desperate Times
In cities like Orlando and Houston, scammers are targeting the housing market. They post fake rental listings to lure tenants into signing fake rental leases. The goal is to trick struggling families into thinking they’ve secured a decent, affordable place—and then cheat them out of their savings. The problem is so bad that FBI field offices have issued alerts.
In states like California, Missouri, and Pennsylvania, the local agencies that allocate Section 8 vouchers face an insurmountable tide. Often, they must let seven or more years pass before opening up waitlists. When the lists open, renters apply by the tens of thousands, outnumbering waitlist slots by seven or eight to one. Throngs of applicants sometimes crash the sign-up portals. If admitted, applicants will wait several more years to get approved for housing, if that ever happens.
In Boston, affordable housing is so scarce now that renters must outbid others to snag an apartment. The listed rents are astronomical. The bids push them even higher. Startups like RentBerry and Rentwolf have piloted apps to monetize the bidding wars. But for renters without much money in the bank, the bidding wars—online or off—crush hopes for a decent, affordable place.
And in 2022, Maxwell Frost, a 25-year-old man, set out to find a one-bedroom apartment in Washington, DC. Weeks before, he had made history: Florida’s 10th district elected him the youngest ever member of and the very first Gen Z’er in Congress. But after Frost paid a hefty application fee for one apartment, the landlord denied his application. As Frost put it, the hefty application fees were just “the sour cherry on top of a brutal housing market,” in which rents had skyrocketed over years and decades. Frosts’ housing struggles “generated a wide range of commiserating among” his fellow Gen Z’ers. Many of them see “no feasible way to get a place of their own,” and—far more than past generations—they have been compelled to live as adults at home with their parents.
These are all just snapshots of an affordable housing crisis that has spiraled in the United States since the 1970s. That crisis has touched households of all shades and backgrounds, except the very wealthiest. But renters continue to get it the worst. Indeed, “the typical American renter is now [cost]-burdened,” reported The New York Times in June 2023. In other words, renters on average pay 30% or more of their income on housing costs. This 30% threshold is a critical one. It means that housing costs are swallowing up household budgets, making it difficult for families to afford things like groceries, medicine, daycare, transportation, and other basic life expenses. In the 50 largest cities, rents have increased 175% faster than household incomes since 2001. For lower-income households, rents are outpacing incomes even faster. Currently, for every 100 extremely low-income renting households in the United States, there are only 34 affordable and available homes. All this while households face rising costs for food supplies, natural gas, car fuel, electricity, energy, and other necessities.
The affordable housing crisis is long-running, though recent years have brought renewed debate around how exactly to fix it. Currently, the most popular solution involves calls to combat segregation and exclusionary zoning regulations. The idea is that doing so will help remove constraints on housing production, amping up supply and bringing down prices for households across the board. This policy “solution,” however, is insufficient. Here’s why.
YIMBY: Combatting Affordable Housing Barriers
The past decade has seen sweeping changes in the way Americans think and talk about affordable housing. Up until the financial crisis of 2008 and 2009, few—beyond a select group of scholars and advocates—questioned the norms of NIMBY (“not in my back yard”) and exclusionary zoning that kept rentals and multi-family units out of many neighborhoods. And few raised concerns about the severity of the affordable housing crisis experienced by renters, especially those with lower incomes. Instead, public debate and policy centered on “concentrated poverty,” the socio-economic deficits of poverty-concentrated neighborhoods, and the promises of “deconcentrating” such neighborhoods and moving needy families “up” into homeownership.
Current conditions have given rise to a new political and cultural moment. Increasingly, prominent voices are calling for policies to counter NIMBY with YIMBY—”yes, in my back yard.” Such calls explicitly highlight the intimately linked issues of rental housing afford-ability and exclusionary barriers in the housing market.
This siren call brings together different political threads. First, the financial crisis dimmed homeownership prospects and pushed more Americans of various incomes into the renter market. Consequently, renters and their specific troubles have become big topics in American politics. Through the 2020 and 2022 elections, for example, it became commonplace for candidates to offer wide-ranging plans to fix the housing crisis and ease burdens for renters. Second, the rise of millennials and Gen Z’ers combined with the race and class diversification of suburbs and small towns have reconfigured politics in many historically shut-off areas. In many communities, populations are now pushing to change the status quo, challenging long-standing cultural and political opposition to affordable housing. Third, a smattering of voices has also advocated what some have called “supply-side progressivism.” That is, while America’s public policies and debates—especially those on the liberal or progressive side—have centered on demand-side solutions, advocates suggest we need to go beyond just subsidizing various kinds of consumption to embrace supply-side solutions, building and producing new marketplaces. That especially applies to housing, where the removal of exclusionary zoning regulations promises to spur production of affordable homes across a much wider range of neighborhoods and places.
This new cultural and political moment represents a step in the right direction. First, it elevates renters and their long-ignored needs and problems to the center of policy debates. Additionally, it charts a vision of supply-side policies to serve the greater public good. In the housing market, demand-side solutions—like housing vouchers—are pivotal but not enough. For starters, they are consistently underfunded and there aren’t nearly enough of them. And even if there were enough vouchers, there remains a vast under-supply of good, affordable housing for voucher recipients to rent.
Besides that, the YIMBY moment signals a welcome awareness that America’s housing policy failures go beyond just residential segregation. Rather, an equally monumental failure can be found in the severe shortage of affordable rental homes, especially for lower-income people, amidst long-running rent inflation. And the moment also lays bare that the toll of segregation—as rooted in exclusionary zoning—goes beyond just “neighborhood effects” on households. Rather, segregation matters for affordable housing, as spatial constraints limit the overall supply.
Beyond YIMBY: Reimagining Affordable Housing Production
However promising the YIMBY moment and its solutions are, it ultimately falls short of what we need to fix the affordable housing crisis.
Calls to dismantle zoning regulations, for instance, have focused mainly on expanding the supply of market-rate housing. The idea is that doing so will lower prices across the board, boosting affordability even for lower-income households. But this idea threatens to repeat past mistakes. American policies have always let the market decide where and for whom it wants to build housing. And the market has never chosen to build for lower-income renters. Hence, YIMBY advances a progressive critique of exclusionary zoning, but ultimately puts that in service of “trickle-down” economics.
Relatedly, YIMBY rhetoric prioritizes new construction. But in most cases, new construction is inherently tilted toward higher-income households. Plus, America’s policies have always favored new construction over the repair of existing properties—this hasn’t worked. In fact, to a large degree, the affordability crisis is a crisis of disrepair. It’s clear that most affordable housing has not been built to house lower-income renters or those subsidized through vouchers or other government programs. Rather, most affordable housing consists of properties that are totally unassisted. Such properties have deteriorated over the years and therefore no longer attract higher-income renters. So the properties become affordable by default—what economists call “natural” or “filtered-down” affordable housing. Consequently, many otherwise affordable homes become unlivable and go offline, unreplaced, each year. And of the housing that remains, a large share is in poor condition, but still has rents set high enough to financially burden lower-income renters. Put differently, the prices that lower-income renters pay don’t reflect the quality of the places they rent. Rather, they reflect the stunning dearth of choice in a “captive” market stunted by a severe affordable housing shortage.
All this illustrates a larger point: We don’t need to unfetter affordable housing production; we need to reimagine it. The YIMBY moment has called attention to and challenged what we might call “external” constraints on the affordable housing supply. But it has overlooked the constraints built into the design of the housing market that it wants to liberate. As long as our affordable housing supply remains predicated on the hope that housing will trickle down to lower-income renters, we will continue to face severe gaps and shortages.
Policymakers need to embrace a new vision. Smart voices have proposed expanding things like public-led housing production and the use of public banking, as well as expanding and restructuring existing policies like the Low-Income Housing Tax Credit. All are things we should consider, but none will work without a larger overall commitment to fighting wealth inequality and devoting general revenue dollars to directly support renters in need.